ECA Competition

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ECA Competition

Responding to a dramatic transformation in export credit financing as a consequence of the 2007-08 financial crisis, the Export-Import Bank of the United States (Ex-Im Bank) supported significant increases in demand for its financing and insurance programs which addressed newly created gaps in export and trade finance generated by the banking crisis. Its volume of business increased from $21 billion in 2009 to $24.5 billion in 2010 before receding somewhat in 2013 as a consequence of the capital markets absorbing some of the demand for aircraft financing.

But just as Ex-Im Bank’s programs have grown in response to the financial crisis so those of other export credit agencies (ECAs) have expanded in size and scope as they too have sought to rebuild their economies on the basis of export growth, but only more so.

Across the spectrum of export credit agencies, for countries large and small, export credit agencies have grown in size to where almost all major ECAs are now providing a volume of support several times in size to that of the United States. They are highly proactive and responsive to the needs of their exporters and constantly looking for ways in which new programs can stimulate new opportunities for their exporters.

According to an interview CEE had with the German ECA, they anticipate volume in excess of $90 billion in 2014, about 4 times the volume of Ex-Im Bank.

The Korean ECA, KEXIM, is likewise expected to spend about $95 billion this year supporting Korean exports and Korean participation in infrastructure and industrial projects, with $26 billion supporting that nation’s mid-market or emerging exporters.

The Canadian ECA, EDC, is expected to be over $100 billon this year, as it has been for the past several years.

And the Export-Import Bank of China (China Exim Bank) exceed all of the rest, committing over $300 billion in support of its country’s exports in each of the past several years. Senior China Exim Bank officials stated at an African Investment Summit in Hong Kong in November, 2013 that China Exim Bank would provide 70-80% of US$1 trillion of Chinese financing into Africa between now and 2025. Zhao Changhui, the chief country risk analyst at the Bank said that China was looking to participate in infrastructure projects in Africa, including transnational highways, railways, airports and other infrastructure. If that figure is accurate it would average out to more than $80 billion per year of which about $65 billion a year will come from China Exim Bank in the form of direct investment and loans.

With these increasingly proactive ECAs providing aggressive financing competition to U.S. Ex-Im Bank’s efforts to support U.S. exporters, the shutdown of Ex-Im Bank as proposed by the Bank’s critics would be catastrophic in terms of lost exports and lost U. S. jobs.